PDA

View Full Version : Exit Strategies



pimpit
03-10-2006, 07:16 PM
My exit strategie is pretty pathetic,

if stock drops 20-25% of its profits and breaks its uptrend, I sell. Couple of times I sold out too early.

what is yours?

Snow Leopard
03-10-2006, 07:44 PM
A beer thanks.

pimpit
03-10-2006, 07:57 PM
PT: do you have the beer before you exit or after? or do you exit while having the beer?

Lizard
03-10-2006, 08:41 PM
I prefer selling too early over selling too late. For some reason, it seems to cause me less angst. MFT being the exception.

My main trigger is when a stock is more than 20% above my valuation. But it's a rough guide only, and I keep a close eye on anything over what I consider to be fair value.

Mick100
04-10-2006, 12:14 AM
quote:Originally posted by pimpit

PT: do you have the beer before you exit or after? or do you exit while having the beer?


The best time to exit is before a bear [8D]
,

pimpit
04-10-2006, 12:49 AM
quote:Originally posted by Mick100

The best time to exit is before a bear [8D]
,


now I remember you, you were the first to notice snipers gone. you are the bear. [xx(]

Mick100
04-10-2006, 12:59 AM
quote:Originally posted by pimpit





now I remember you, you were the first to notice snipers gone. you are the bear. [xx(]


And your the pig [|)]
.

pimpit
04-10-2006, 01:31 AM
quote:Originally posted by Mick100


And your the pig [|)]
.


while you are hunting wild animals I am making good money. [xx(][xx(][xx(]

ratkin
04-10-2006, 07:55 PM
Looking at my long term holdings over the years i would of done better if i NEVER sold a single stock.
Sure a few companies i would of gone down with the ship, but there were plenty i exited which went much higher

pimpit
04-10-2006, 09:08 PM
I hold max of 20 different stocks at any given time,

I track them using yahoo/findata, and set sell triggers at -10% and -15% (as its delayed). When its passed -20% its definitely a sell. There are several of exceptions, but 80% of them get sold at market at –20%. I keep track of volume and time to some extent before hitting the panic exit button.

Halebop
04-10-2006, 11:07 PM
quote:Originally posted by pimpit

I hold max of 20 different stocks at any given time,

I track them using yahoo/findata, and set sell triggers at -10% and -15% (as its delayed). When its passed -20% its definitely a sell. There are several of exceptions, but 80% of them get sold at market at –20%. I keep track of volume and time to some extent before hitting the panic exit button.

Pimpit, why not keep things simple and just buy shares that rise?! [:p]

My favoured strategy is to buy low and sell high. [8D]

...just ask if you want any more useful commentary. Plenty more where those came from...

pimpit
04-10-2006, 11:48 PM
Halebop: Buying is easy part, I only buy stocks that been trending up for at least couple of months. I do not care about buying at the rock bottom to get the full gain, I am happy as long as I make 30-40% gain. This year been good, I put 15k into ASX early this year, now I have almost 31k.

Obviously some of them don’t work out as expected I want to eliminate those before they give away the gain(s).

pimpit
05-10-2006, 09:06 PM
broke:you homeless guy, that is my minimum 30/40% gain. Waiting to hear your plan...

pimpit
10-10-2006, 11:23 PM
Broke I see you passed your 6th form maths.

Obey the stop signs

Louise Bedford explains why following a sound stop loss strategy is an essential skill for share trading.

Trading without a stop loss is like rock climbing without a safety harness. One small lapse in judgement could spell catastrophe.

Without a clear idea regarding how to set a stop loss, your longevity as a trader will be limited. Losing large proportions of capital takes a horrible emotional toll. Your first aim must be capital preservation. Making money is a by-product of following your trading rules. Following a sound stop loss strategy is an essential skill.
Loss control

Imagine that you have $5000 to trade with, and you lose 50% of this amount. How much money in percentage terms do you have to make to breakeven on your next trade? If you automatically said 50%, this is incorrect. You need to make 100% on your remaining $2500, to make up the lost $2500, and break-even! Things are never as intuitive as they first appear. Table 1 emphasizes the importance of keeping your losses small so that you can recover and continue to trade.
Table 1: recovery percentages

% Loss of Capital % Gains Required to Recover
5 5.3
10 11.1
15 17.6
20 25.0
25 33.3
30 42.9
35 53.8
40 66.7
45 81.8
50 100.0
55 122.0
60 150.0

If you lose 25% of your account, you must make 33.3% profit on the remaining equity, simply to break-even. Keep your total equity drawdown to less than 20% and you have a chance of surviving in the sharemarket. Trading is not about avoiding risk - it is about managing risk.
Types of stops

An initial stop is designed to protect your capital. Even successful traders find that they only make winning trades around 50% of the time. As long as the dollars gained outweigh the dollars lost, then you will be profitable, even if your hit-rate is quite low.

A breakeven stop will help lock in a no-loss trade. This type of stop is implemented once a trade has begun to co-operate and there is now little threat of your initial stop being hit. At least when you have moved your stop to breakeven, there is a chance that you will end up with a profitable trade. Especially with the application of leverage, it is important to move your stop to breakeven as soon as reasonably possible. This will minimise the potential drawdown of your account.

Trailing stops are designed to protect your profit. Once the trade has trended strongly in the expected direction, you can follow the trend by moving your stop. You could also decide to extract money from the position if the option hits your profit target. I only use profit targets for option and warrant trades, not for share trades. Profit targets tend to cap available profits. Learn to protect your profits as well as protecting your initial capital and you will be well on the way to trading effectively.

You may also need to consider a time stop if the instrument doesn’t co-operate in your allotted time frame. Due to the effect of time decay on options and warrants, it is essential that you set a time stop, or it is guaranteed that you will lose all of your trading equity in that position. For bought option positions, as a rule, always exit prior to the final month before expiry.

Try not to be too trigger happy when exiting based on a time stop for a share. The markets distribute money from the impatient to the patient. Give your trade a chance to co-operate before exiting.

Be aware that if the market is dropping like a stone, it may gap past your stop loss level. If that happens to you, just exit anyway, even if your loss was greater than initially anticipated.
How to set stops

There are four main ways to set a stop loss level:

Pattern based stop loss traders will exit trades if the share breaks downwards through a trend-line for example, or a significant line of support. Technical indicators can be used as a stop, for example, a dead cross of two moving averages may trigger an exit. Percent drawdown or retracement methods suggest that if the instrument dr